A sign on a shop window indicates the store is closed in Ottawa, Monday March 23, 2020. THE CANADIAN PRESS/Adrian Wyld

Indebted Canadian businesses more ‘fragile’ than during 1st wave, BDC economist warns

The study said 87 per cent of entrepreneurs are confident they will make it through the crisis

A new study says many Canadian entrepreneurs are focused on shoring up their balance sheets after recording a drastic drop in revenues and mounting debt during the first wave of COVID-19.

The Business Development Bank of Canada survey says the top priority of business owners is getting their financial houses in order, including reducing operating costs and improving cash flow.

Investing in technology was also a priority for entrepreneurs, according to the study which also listed a focus on remote work, online sales and reviving growth as other key areas.

The study found that small- and medium-sized businesses were hit hard by the crisis, with 76 per cent reporting a decline in revenues and profits during the pandemic.

Nearly half ending up laying off staff, while about 39 per cent of entrepreneurs took on more debt to survive, the BDC said.

Still, the BDC study said 87 per cent of entrepreneurs are confident they will make it through the crisis.

Pierre Cleroux, BDC’s vice-president of research and chief economist, says his “biggest worry” is the high debt levels of many businesses.

“If there’s a second wave and we have to go into lockdowns, the good news is businesses are more prepared,” he said in an interview. “They’ve worked hard to be more efficient, reduce costs and be more present online.

“The bad news is they are more in debt than they were six months ago, so they are more fragile.”

Cleroux said the transition to remote working and the focus on technology and online sales has been a significant shift.

“I never saw such a momentum in terms of investing in technology,” Cleroux said. “This is going to help them in the long run.”

More than half of entrepreneurs surveyed said remote working helped their business innovate and improved employee productivity.

“For many years, businesses were not really open to remote work because they didn’t think it would be beneficial,” Cleroux said.

“The pandemic has really changed that perception.”

Only one in five entrepreneurs said teleworking hurt innovation or productivity.

The BDC study also found that the pandemic has changed the spending habits of Canadians.

The research said more than 83 per cent of Canadian shoppers were willing to pay more for local products, while 56 per cent made more online purchases during the pandemic.

The study said the importance of e-commerce was highlighted by business owners and that companies that were already selling online reported being less affected by the lockdown.

The BDC said the study is based on two surveys, with 1,000 Canadian small- and medium-sized enterprise leaders and 2,000 consumers polled in May and June.

READ MORE: Focus on innovation, not alcohol, key to survival for restaurants, experts say

The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Coronaviruseconomy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

(File photo)
BCCDC reports new COVID-19 case on Kelowna flight

WestJet flight 182 from Kelowna to Calgary had a case of COVID-19 on board Oct. 10

Advance voting is already underway in the 42nd general election in British Columbia. Election day is Oct. 24.(Black Press files photo)
QUIZ: Are you ready for the B.C. election?

Take this short test and see how much you know about elections and voting

On a tour through B.C.’s interior on Oct. 17, John Horgan visited Penticton today, talking with supporters and volunteers. (Phil McLachlan - Kelowna Capital News)
Childcare, healthcare hot topics during John Horgan’s Penticton visit

The NDP government today pledged $2.9 million to provide 116 full-time childcare spaces

The Lake Country Fire Department is mourning the loss of Karl Featherstone who died suddenly at 47 years old on Oct. 11. (Photo Submitted)
Lake Country Fire Department mourns sudden death of firefighter

47-year-old Karl Featherstone died on Oct. 11.

In this photo provided by Shannon Kiss, smoke from the CalWood Fire billows, Sunday, Oct. 18, 2020, as seen from Gunbarrel, Colo. (Shannon Kiss via AP)
‘First guys out:’ western Canadian air tanker fleet busy despite drop in wildfires

CEO believes wildfires have become more dangerous in recent years as people live closer to where they start

Employee Sophia Lovink shows off a bag of merchandise in Toronto on Thursday, June 11, 2020. (THE CANADIAN PRESS/Nathan Denette)
Canada gets C-average grade on 2nd year of cannabis legalization

Cannabis Council of Canada releases report card on federal government and legalization

(Black Press Media files)
B.C. suburbs could see increased demand for rental units as people work from home

Vancouver’s average monthly rent is the highest out of 35 cities across Canada

Fort St. John councillor Trevor Bolin (B.C. Conservative Party)
BC Conservatives leader fights back after BC Liberals leak 2018 workplace harassment case

Sexual harassment case was connected to employee being terminated, WorkSafeBC found

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

The BC Ferries vessel the Queen of Oak Bay. (News Bulletin file photo)
‘Buy a boat,’ Horgan advises anti-maskers on BC Ferries

NDP leader John Horgan talks COVID-19 misinformation

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Canadian and American flags fly near the Ambassador Bridge at the Canada-USA border crossing in Windsor, Ont. on Saturday, March 21, 2020. Restrictions on non-essential travel between Canada and the United States are being extended until at least Nov. 21. THE CANADIAN PRESS/Rob Gurdebeke
Non-essential travel restrictions at Canada-U.S. border extended to at least Nov. 21

The restrictions do not apply to those providing essential services in either country

(Phil McLachlan - Capital News)
UPDATE: Abandoned Kelowna heritage building fire deemed suspicious

The building sustained major fire damage to the exterior and roof area

Most Read